An inconvenient lack of metrics

Green marketing is the strategy du jour, as U.S. companies of all sizes adopt eco-friendly business practices.

Some of the largest global manufacturers, such as GE and Siemens, have made the environment a core part of their business strategy in recent years and are aggressively communicating this positioning in their advertising and marketing platforms. In the shipping industry, United Parcel Service of America is touting its fleet of alternative-fuel delivery trucks.

Companies are also embracing environmental practices within their supply chains, making sure they are sourcing eco materials and partnering with distributors and other channel partners to reduce their environmental footprints.

And while many measures exist to demonstrate the impact these practices are having—or not having—on the environment, such as greenhouse gas emissions and energy consumption, there are few metrics in place to evaluate the marketing impact of "eco business," such as perception of companies as eco-friendly or the impact of eco strategies on purchase intent.

"Where are the green metrics?" asked John Favalo, managing partner-Group B2B, Eric Mower & Associates, during a panel discussion at last month's Association of National Advertisers/BtoB event in Santa Clara, Calif.

Few executives at eco-friendly companies can answer that question.

"We are just starting to put those kinds of metrics in place," said Tom Haas, CMO of global manufacturer Siemens Corp., which last year reorganized its company to focus on three core businesses—health care, industry, and energy and the environment.

In November, Siemens rolled out a $145 million ad campaign called "Siemens Answers" to promote this new positioning, and last month it introduced several new TV spots that are part of the campaign. The campaign was developed by Ogilvy New York and Ogilvy Frankfurt.

One of the most popular new spots, according to early research, shows wind turbines and promotes Siemens' efforts to develop alternative energy sources.

"Before launching the new ad campaign, we did research among business executives and government officials, and found out that companies that are providing solutions to health care and the environment received a greater lift [in awareness]," Haas said. "We want to be perceived as a company that can provide answers in these areas, and we are looking to show what we are doing to walk the talk."

Some of these efforts include a redesigned home page focusing on Siemens' Green Mobility program for providing environmentally friendly transportation and logistics services, and a sustainability presentation that the sales force uses to show how the company is developing products to help the environment.

Other large b-to-b companies say they are just in the beginning stages of measuring the marketing impact of their eco programs.

"Environmental stewardship and corporate responsibility have always been part of our corporate culture," said Lynnette McIntire, a UPS spokeswoman who serves on the company's sustainability committee.

She said UPS reports on environmental key performance indicators (KPIs) such as carbon dioxide emissions, water consumption and hazardous waste management in its annual sustainability report and online (sustainability.ups.com).

"We have always done this reporting, but we recently stepped up to the table and started talking about it," McIntyre said. "We are starting to embed environmental messaging into our communications materials."

UPS currently does not have specific metrics in place that measure the marketing impact of its environmental messaging, McIntyre said. Instead, it relies on third-party reports such as the Dow Jones Sustainability Index, which tracks the financial performance of sustainability-driven companies, and the FTSE4Good Index, which measures the performance of companies that meet global corporate responsibility standards. FTSE is a joint venture between the Financial Times and London Stock Exchange.

UPS is also rolling out eco business practices. Last month it introduced a fleet of compressed natural gas delivery trucks in Texas, Georgia and California to help reduce the company's carbon footprint and its dependence on fossil fuels. It is also working with its customers to help them reduce their impact on the environment, such as educating them about using less filler in packaging and moving to electronic statements, McIntyre said.

A BearingPoint study released in February found that while 71% of U.S. companies promote environmental friendliness in their marketing, they lag their global counterparts in implementing green supply chains, the process by which products get from design to delivery.

The study found that only 24% of U.S. companies have implemented green supply chains, compared with 38% of European companies and 100% of Japanese companies. The report was based on an online survey of more than 600 global business executives.

"From a marketing perspective, talk can be cheap," said Brent Proud, manager-management consulting, supply chain and sourcing practice at BearingPoint.

"Companies must stay the course and maintain environmental strategies that differentiate them from their competitors. Companies like GE, Dow, Dupont—they get it."

Patti Temple Rocks, VP-global communications and reputation at Dow Chemical Co., said there is a danger in the term "green marketing."

"So many people are using `green' in marketing terms, but it's not a marketing concept—it's how you do business," Temple Rocks said. "We don't even use the term `green marketing.' It is part of our DNA. To think of it purely in a marketing context is a risky proposition."

In 2006, Dow rolled out its "Human Element" campaign, created by Draftfcb, Chicago, which shows how the company is developing products to help the environment and society.

"Our `Human Element' campaign creatively has its roots in our 2015 sustainability goals," Temple Rocks said, referring to a series of initiatives Dow announced in 2006 aimed at addressing global challenges by 2015, such as reducing the company's greenhouse gas emissions by 2.5% annually and developing alternative sources of energy.

Dow is seeing a lift in metrics that have to do with corporate reputation, and those metrics tie in with the environment, Temple Rocks said.

"Since we started the campaign in 2006, we've seen increases against all measures by which we measure our reputation," she said. "We are definitely asking questions about whether our target audience has respect or admiration for us. To the degree that we believe a commitment to the environment is a proxy for respect, we are asking those questions."

Perhaps the most important metric is sales. GE, which introduced its "ecomagination" platform in 2005, has built its core business strategy around the development of products and services that address some of the world's toughest environmental problems.

GE has committed to invest $1.5 billion in R&D to develop environmentally friendly products through 2010 and aims to double revenue from eco products and services, with a goal of reaching $20 billion by that year.

So far it's on track. The company reported revenue from eco products exceeded $14 billion in 2007.